THE CHALLENGE
Solvency II requires a step change in the standard of documentation for EU insurance companies seeking internal model approval. In simple terms, the documentation must show what is done, why it is done and how it is done. The level of documentation required is in excess of what is currently considered industry best practice. This documentation is much wider than the calculation engine of the model, and also includes other aspects such as the processes and governance around the model and its validation.
The key aims of Solvency II documentation should be threefold – it should be something that:
• Meets the documentation standard for internal model approval under Solvency II;
• Is useful for the business; and
• Makes life easier for the regulator.
It would be a mistake only to have the first aim, as ultimately it would make it more difficult to maintain the Solvency II documentation standard. Engendering sufficient cultural change so that staff regard documentation as useful and take responsibility for it as part of their job is an important part of the overall embedding process.
OUR EXPERIENCE
APR has relevant experience of delivering actuarial documentation solutions, both in Solvency II and wider areas. We adopt a practical focus: we are much more interested in getting the job done than talking about getting the job done. We have a genuine interest in documentation and it is an area in which we have proven our ability to add real value.
We have led the delivery of Solvency II documentation for a large composite insurance group for the past seven months, so have specific experience of the challenges in this area. The services delivered in this project include:
• Developing a documentation vision.
• Developing a documentation policy.
• Creating an index of the documentation which would be required to meet the Solvency II documentation approval standard.
• Capturing information on existing documentation.
• Performing a gap analysis between the existing documentation and the required documentation.
• Creating templates for key areas of documentation to ensure consistency and reduce the risk of required information not being captured.
• Drafting sections of the pre-application qualifying criteria (PAQC) submission, and reviewed overall submission.
• Delivering training to the various business units on documentation to assist with the embedding of the documentation vision and policy.
• Developing the key requirements for a Documentation Management System (DMS).
We have also delivered a major non-Solvency II actuarial documentation project for one of our clients. The project successfully addressed problems with existing material, which was incomplete, out of date, difficult to locate, and often unreliable, poorly structured and badly written. The project produced over 1,500 pages of polished, accurate, useful documentation that is being widely used.
Roger Austin, the APR partner leading our Solvency II services, is also the chair of the Faculty of Actuaries Solvency II Research Group, a member of both the FSA’s Internal Model Experts Group and the FSA’s Pillar 5 Experts Group, as well as being a member of the actuarial profession’s General Insurance Working Party on the Internal Model Approval Process.
OUR SERVICES
Our Solvency II documentation services can broadly be broken down into four main areas:
• Setting standards and controls
• Identifying the gaps
• Producing the required documentation
• Monitoring and review of documentation
In addition, the use of a suitable DMS will ease compliance with the regulatory requirements since its features can be used to enforce rigour to the documentation policy. To this end, we have developed an ‘off-the-shelf’ DMS specifically tailored to Solvency II requirements in conjunction with a software company that specialises in developing and implementing SharePoint services.
Services are delivered through a combination of the APR partners, our self-employed contractors and our actuarial employees, a number of whom have direct experience of producing and reviewing actuarial documentation.
For more details on any of the above services, please contact us via our contacts page.